Judge Allows Suit Challenging Health-Law Subsidies

By Brent Kendall

President Barack Obama delivers remarks on the Affordable Health Care Act in the Rose Garden of the White House on Monday.

Opponents of the federal health-care law can move forward with a lawsuit challenging some subsidies for people who buy health insurance, but the financial assistance will remain in place while the case proceeds, a federal judge said Tuesday.

The mixed ruling means the Obama administration will have to mount a full defense of the law’s subsidy provisions in a Washington, D.C., federal court. Challengers had sought a preliminary injunction to block subsidies immediately for those who buy health insurance through federally run online exchanges.

Such an injunction could have dealt a considerable blow to the administration at a sensitive time, as U.S. officials continue to fight technical difficulties with a federally run website.

U.S. District Judge Paul Friedman said the case would proceed on an expedited basis. He said he could reach a decision before consumers face a February 2014 deadline for buying insurance in order to avoid penalties. In August, a federal judge in Oklahoma allowed a similar challenge by that state to proceed.

Under the 2010 Affordable Care Act, most Americans must carry health insurance or face a tax penalty. To ease the financial burden, the law provided for subsidies to make coverage more affordable to low- and middle-income individuals.

The plaintiffs in the lawsuit include four people who don’t want to buy the level of health insurance required by the law.

The act says people can qualify for subsidies if they buy health insurance through an exchange “established by the state.” A majority of states, however, chose not to set up their own marketplaces, leaving the federal government to run some or all of the exchanges in 36 states.

The challengers contend the subsidies don’t apply to consumers who buy insurance through federally run exchanges. And they say the Internal Revenue Service contravened the text of the law when it said last year that the subsidies would be available to individuals who bought insurance on either type of exchange.

The Justice Department, defending the law in court, argued Congress plainly intended for the subsidies to be available to all consumers. The department said challengers shouldn’t be allowed to proceed with a legal effort that runs counter to the law’s aim of making insurance affordable.

A department spokeswoman declined to comment on the judge’s ruling Tuesday.

The challengers “have been hoping for a quick ruling since we filed this case, and now it looks like we will get it,” said Sam Kazman of the Competitive Enterprise Institute, a libertarian group that is assisting the plaintiffs.

The ambiguous language in the law could be clarified with the change of a few words, but a deeply divided Congress is unlikely to do so, raising the stakes in the case.